The XYZ program: A B-Web incarnate?
Ronald R Tidd

08/01/2000
Taxes
4-5
Copyright (c) 2000 Bell & Howell Information and Learning Company. All rights reserved. Copyright Commerce Clearing House, Inc. Aug 2000

The American Institute of Certified Public Accountants (AICPA) leadership recently disclosed the development of the XYZ program (www.aicpa.org/news/ p041200.htm). The inauspicious title (just a placeholder, as explained below) belies the credential's auspicious nature. It is a response to the needs of decision makers who are trying to identify the strategic implications and applications of information technologies in commerce and rely on trusted professionals in tax, accounting and law. Thus, the XYZ program is not directly a technology issue, but rather a response to the global, digital economy that is emerging because of information technologies. The purpose of this column is to examine this new credential in that context, starting with a discussion of the debate about how the Internet can most advantageously and profitably be used. As usual, links to web resources are provided for those who want more information about these career- and practice-significant issues.

The March. column1 focused on several acronyms related to technology at the operations level, where the issues are related to technological details. It ignored the acronyms related to the strategy level, where decisions are made about which business model should be selected and how technology should be used to implement it. The February column2 identified several alternative business models: business-toconsumer (B2C), a less profitable but more publicized strategy based on direct sales between a commercial enterprise and a retail customer; business-tobusiness (B2B), the most profitable and increasingly publicized strategy involving direct sales between commercial enterprises; and consumer-to-consumer (C2C), the "casual" sales via auctions between consumers, or in effect, web-based garage sales. Recently, the business-to-employee segment has received some attention, primarily with respect to human resource management functions such as employee benefits management (www.zdnet.com/anchordesk/story/ story 4683.html.

These strategies are piecemeal attempts (almost faddish in nature) to find a business application for technology in a web-based economy. They ignore the ability of networked computers to integrate business across the entire value chain by facilitating and expediting communications among all participants in that value chain. The business web (B-Web) strategy proposed by Dan Tapscott3 begins to address this deficiency, but does not appear to extend beyond the commercial enterprises that provide goods and services in a value chain. The final consumer is not included until one moves to what has recently been referred to as the A-to-Z strategy4 (www.thestandard.com/article/display/ 0,1151,14703,00.html). It is an all-inclusive strategy that involves everyone from the producer of raw materials to the final customer, and it includes a feedback loop. This strategy provides a strong conceptual foundation for what successful participants in the digital economy should strive for, including the tax professionals who advise them. After all, value should be added along the entire value chain, not at its disjointed and disconnected components.

The XYZ program is a multinational strategic response to the demands of a global economy. (The XYZ designation is temporary until the completion of market studies aimed at identifying a logo and a name with global appeal.) Currently, the consortium includes eight professional institutes in this attempt to establish an umbrella credential for a broadly defined set of information professionals, such as those in accounting, law, information technology, human resources, management consulting and risk management. Thus, it provides an additional credential for attorneys and CPAs, and reflects a B-Web strategy with a focus on the breadth of services to be offered under the credential. The plan is to issue the first credentials in summer 2002.

The goal of the XYZ program is to provide valueadded services (conceivably within the same firm) that are broader in scope and higher up on the information value chain. The former is already practiced to some extent in Europe, where public accounting firms offer both accounting and legal services. The latter is an essential progression from the information value chain's bottom, where business events are recorded (bookkeeping), to its top, where information professionals participate in the decision-making processes that use the information processed in the lower levels.

For U.S. practitioners, the AICPA might be able to achieve the objectives of the XYZ program under the existing CPA credentialing program. There are, however, several arguments against this approach. First and foremost the CPA designation is U.S: specific with limited value outside of the United States. Second, even in the United States, the CPA brand is associated with services based on regulatory mandates (audit and tax), not market forces. That brand is respected and valued, but limited. Third, the CPA certification processes regulated by 54 jurisdictions within the United States, each with different business and political environments. Implementation of the 150-hour requirement provides adequate evidence of the problems that the multijurisdictional environment creates (www.aicpa.org/states/uaa/150chart.htm), including the inability to move quickly in a coordinated manner.

The significance of the AICPA's concern over the CPA branding issues should not be underestimated. As Robert Elliot noted,s U.S. CPAs are in the same situation that Toyota found itself when it decided to compete in the market for luxury autos dominated by Mercedes Benz and BMW-potential buyers did not link luxury vehicles with the Toyota brand name. Lexus was born. Consequently, the XYZ consortium is exerting great effort to develop a brand name and image that will have international appeal in the market for information services. Market research was conducted in 11 countries and investigated the credential's attractiveness to both consumers (CEOs, CFOs, etc.) and potential credential holders.

As noted above, the XYZ program is a B-Web response. Although clientele demand was assessed in the planning stages, the program does not appear to integrate clientele into the value chain on a continuing and timely basis. Fortunately, the AICPA is also initiating a web-based vertical portal that links accounting professionals with each other and with existing and prospective clients. Vertical portals, also known as vortals (webopedia.Internet.com/TERM/v/vortal html) and vertical business portals (VBP), are Information Ale manifestations of vertical market integration. (For example, travel portals allow customers to book airline, hotel and car rentals through their web sites.) In general, the goal of a VBP is to provide a familiar and focused virtual community that facilitates commerce in a relatively narrowly defined market segment (www. busi ness2. corn/content/magazine/vision/1999/05/01/11761). For accounting professionals, the AICPA's vertical portal should provide an A-to-Z strategy for the profession as a whole. Individual practices should investigate the attractiveness of a similar approach in their local markets.

Tax professionals now confront a dynamic and global economy in which success requires new professional and practice strategies that are just as dynamic and global. They must be able to form new alliances as needed to meet the needs of the clientele (a.k.a., business partners) that they serve. Regardless of their current credentials, tax professionals should find the XYZ program to be a necessary and supportive vehicle, if the program survives the battles that are likely to occur between proponents of the existing and proponents of the emerging professional models.

Ronald R Tidd, Ph.D., CPA, is an Assistant Professor of Accounting in the School of Business and Economics at Michigan Technological University in Houghton, Michigan.

Footnotes:

ENDNOTES

1Ronald R. Tidd, Technology Corner, Technology's Avenues, Applications, and Acronyms for the New Year, TAXES, Mar. 2000, at 7.

2 Ronald R. Tidd, Technology Corner, Web-Based Business Models, Taxes, Feb. 2000, at 7.

3 See Don Tapscott, D. Ticoll and A. Lowy, The Rise of the Business Web, BusiNess 2.0, Nov. 1999, at 198.

4Larry Downes, The Next Big Thing: A-To-Z, THE INDUSTRY STANDARO, May 2000, at 297.

5Robert K. Elliott, AICPA Vision: The Role of the Educator, Keynote Address, AICPA Tax Education Symposium, June 9, 2000.